CREDAI Urges Hike in Home Loan Tax Exemption for Demand Boost

New Delhi, Jan 20 (PTI) In its pre-Budget wish list, realtors apex body CREDAI has urged the government to increase tax exemption limit on principal amount as well as interest paid on home loans to boost demand for residential properties.

Confederation of Real Estate Developers' Associations of India (CREDAI) has also sought changes in definition of affordable housing.

In its pre-Budget recommendations, CREDAI has sought deduction under section 80C for principal repayment of housing loan should be increased from existing limit of Rs 1.5 lakh.

Alternatively, it suggested that the deduction for principal repayment of housing loan should be considered for a separate or standalone exemption.

Moreover, CREDAI said the definition of affordable housing, which was capped at Rs 45 lakh, was given in 2017 and is yet to change since.

"Due to inflation alone, there has been significant rise in real estate prices in the past 7 years. As per data from the National Housing Bank (NHB), there has been an increase of 24 per cent in housing rates since June 2018 in India, which makes the current cap of Rs 45 lakh extremely unfeasible for developers to adhere to," it argued.

CREDAI has recommended that the definition of affordable housing to be revised as "a unit with 90 square meter RERA carpet area in Metros Cities and 120 square meter RERA Carpet Area in Non-metros without a cap on cost of the unit".

Among other major demand, the association said the present limit for deduction of interest on home loans under section 24(b) is Rs 2 lakh.

"It is suggested that, in the case of individuals, the interest in respect of first self-occupied property should be allowed without any limit.

Alternatively, the limit for deduction of interest should be increased to Rs 5 lakh in respect of the self-occupied property.

"With its significant contribution to GDP, employment generation, and infrastructure development, the real estate sector needs a supportive budget that addresses long-standing challenges and paves the way for sustainable growth, especially for the affordable housing segment," said Boman Irani, President, CREDAI.

Atul Monga, CEO & Co-founder, BASIC Home Loan, said the industry is advocating for a significant increase in the tax deduction for home loan interest.

"Currently capped at Rs 2 lakh, there is a push to raise this limit to at least Rs 5 lakh. This adjustment is expected to revitalize the market, especially in the budget homes segment," Monga said.

Real estate brokerage firm InfraMantra founder Shiwang Suraj said the government should grant real estate the long-awaited industry status, streamline the system of project clearance and harmonise GST.

"Such reforms are expected to bolster demand and ease regulatory constraints," he added.